(Recasts; adds comment, details and updates prices)
* No plans to pull troops out of Iraq: U.S. Defense Secretary
* Palladium hits record high of $2,032.94
* SPDR Gold holdings rose to highest since Nov. 27
* Gold specs raise bullish positions in week to Dec. 31
By Asha Sistla
Jan 7 (Reuters) - Gold prices erased early losses and inched up on Tuesday, as fears of a widespread conflict between the United States and Iran persisted, while palladium scaled a new high.
Spot gold XAU= rose 0.2% to $1,569.27 per ounce by 0741 GMT after falling as much as 0.7% earlier in the session, its biggest daily percentage decline in about a month. In the previous session, prices had touched $1,582.59, their highest since April 2013.
U.S. gold futures GCcv1 edged 0.2% higher to $1,571.10.
Warnings of new strikes and retaliation by both the United States and Iran stoked concerns about a broader Middle East conflict, which led to calls in the U.S. Congress for legislation to stop U.S. President Donald Trump going to war with Iran. no escalation in the geopolitical situation, but the tensions have not receded completely and because of that after a good correction in gold, prices have bounced," said Jigar Trivedi, a commodities analyst at Anand Rathi Shares & Stock Brokers in Mumbai.
The sentiment was also boosted after the United States denied a visa to Iranian Foreign Minister Mohammad Javad Zarif that would have let him attend a United Nations Security Council meeting in New York on Thursday. considered a safe asset in times of political and economic uncertainty, had jumped in the last two sessions on concerns of a wider escalation after a U.S. air strike killed Iran's top military commander Qassem Soleimani last week.
Markets were also worried about conflicting reports about American military repositioning troops in preparation for leaving Iraq. things de-escalate (with Iran), then gold will hit lower quite quickly. We would see it go down below $1,500," said Jeffrey Halley, a senior market analyst for the Asia-Pacific region at OANDA.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , rose 0.10% to 896.18 tonnes on Monday, their highest since Nov. 27. GOL/ETF
Speculators increased their bullish positions in COMEX gold and silver contracts in the week to Dec. 31, data showed. CFTC/
Elsewhere, spot palladium XPD= fell 0.3% to $2,024.86, off an all-time peak of $2,032.94 an ounce hit earlier in the session.
The industrial metal, suffering from sustained supply woes, gained about 54% in 2019.
Silver XAG= rose 0.3% to $18.19 an ounce, after touching a more than three-month high at $18.50 in the previous session, while platinum XPT= advanced 0.5% to $967.65.